A spat between Birmingham City Council’s leader and the West Midlands Pension Fund (WMPF) over the top-up fee sponsors are due to pay to the scheme and external investment management fees has prompted the fund to defend its management costs.

John Clancy, who leads Birmingham City Council – one of several UK local authority sponsors of the scheme – has been reported in the media as refusing to pay next year’s top up into the WMPF, saying he would use the £65m (€73m) to protect services from government funding cuts due next year.

Ian Brookfield, councillor and chair of the pensions committee governing the WMPF, said on behalf of the administering authority: “We note the comments by the leader of Birmingham City Council, but his views do not represent the wider political leadership of the West Midlands. No other employer is refusing to pay employer contributions.”

One newspaper reported that several Labour councillor trustees of the pension fund were “poised” to reject the £100m top-up fee requested by the fund’s professional advisers.

A spokesman for Clancy said he was not refusing to pay but had stated that Birmingham could not find an additional £65m on top of £42m already paid this year towards the pension fund deficit.

Clancy said: “The hard-pressed citizens and taxpayers in Birmingham should not be asked to find £65m a year to bail out investment fund managers.”

He has published a book on the topic of what he argues are excessive fees paid to investment fund managers, particularly by public bodies.

The WMPF said it was now in talks with all participating employers as part of the 2016 actuarial valuation, which reviews and resets employer contributions from April 2017.

“As has been widely reported, the vast majority of pension funds are in deficit and face a challenge in generating sufficient investment return and contribution income to pay pensions,” it said.

The WMPF said it had flagged up the potential increase in employer contribution rates three years ago, as well as earlier this year, giving employers time to work these into their financial plans.

Clancy said the pension fund needed to “stop cosseting the investment fund managers who got us all into this mess in the first place”.

He said the pension fund lived in another world, adding: “It needs to get real.”

WMPF defended itself, saying it was recognised within the industry as a front runner in promoting transparency in the reporting of investment management costs.

The fund said it was “voluntarily embracing and disclosing deeper layers of costs and working with CIPFA and the National LGPS Scheme Advisory Board to develop a code of transparency for asset managers”.

Over the last three years, it said it has cut its own ongoing investment management costs by £35m a year, achieved by re-shaping the portfolio to focus on value-added, but without compromising risk and return opportunities.

Over the same period, the WMPF said its assets had outperformed, adding more than £2bn in value and reducing the funding deficit by more than £280m.

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